It was a sluggish start to the year for initial public offerings (IPOs), with a fall in the number of new ASX listings during the six months to June. But their share price performance was better than previous years.
The strongest performers in terms of share price increases were Uniti Wireless Limited, with a 638 per cent gain, Next Science Limited with 311 per cent, and Splitit Payments, whose stock ended the half year 215 per cent above listing price.
Only 23 new listings made it onto the ASX in the six months to June, compared with 36 for the same period in 2018.
However, 17 of the 23 IPOs recorded first day gains at an average of 22 per cent and post-listing share prices continued to increase with an average gain of 63 per cent across all IPOs, according to the latest HLB Mann Judd IPO Watch Mid-Year Report.
Marcus Ohm, HLB Mann Judd partner and author of the report says: “This is a particularly good result and represents a return to the trend of IPOs tending to outperform the market, which has itself had a good six months.”
The new listings raised only $823 million during the June half, which is a sharp decrease from the $2.5 billion raised in the first half of 2018.
The software and services and diversified financials sectors raised the most with $254 million and $203 million respectively.
This underwhelming outcome is reflective of the drop in IPOs in the materials sector compared to previous years as investors are seeking immediate cashflow.
Ohm says: “Materials had only three new listings for the period, compared to 16 for the same period last year. The reduced activity perhaps reflects broader macroeconomic issues and current investor sentiment.”
The small cap sector (less than $100 million market capitalisation) had 13 listings – a grim result compared to the 31 in the same period in 2018.
The large cap sector had 10 listings, with Prospa, Investec Australia Property Fund, Life360 Inc raising over $100 million each.
Nineteen of the listings met their subscription targets. There was an increase in underwritten offers at 39 per cent compared to 17 per cent in 2018.
The pipeline is slow for the remainder of the year with only seven applicants lined up to IPO.